(pdf) Business Strategy Assignment

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Business Strategy
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................11. PESTEL and SWOT analysis of the company to analyse the organisation's capabilities..12. Competitive analysis of the environment of the organisation by using Porter's Five ForcesModel......................................................................................................................................3TASK 2............................................................................................................................................51. Evaluate different types of strategic directions which are available to the firm................5CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10
INTRODUCTIONBusiness strategy is plan of action that are developed by the management department ofthe company to achieve a particular goal or set of organisational aims and objectives. It is masterplan that is used by the management of the company to secure a competitive position in themarket. This assignment is based onL’Oréal S. A. is a French personal care company whichproduces various products such as hair colour, skin care, sun protection, make up, perfume andothers. This company is founded by Eugene Schuller in 1909 and it is the world's largestcosmetic company which headquartered in Clichy, Hauts-de-Seine with a registered office inParis. In this report will be discussed about the impact and influence of the macro environmentand analyse about the internal environment of an organisation. The outcomes will be analysed byapplying Porter's five forces model and various models, theories an concepts will be used toassist the interpretation and understanding of strategic directions to a firm. (Alsudiri, Al-Karaghouli and Eldabi, 2013).TASK 11. PESTEL and SWOT analysis of the company to analyse the organisation's capabilitiesPESTEL analysisIt is tool or technique that is used by the competitors and marketers to determine andmonitor the macro environmental factors that create impact on an organisation. The managementdepartment ofL’Oréal can use this tool to analyse the organisational capabilities. PESTELanalysis of L’Oréal is as following:Political-This factor include the rules and policies of the government in which thecompanies operate their business. L’Oréal operate its business worldwide, in WesternHemisphere, it has benefited for lower taxation polices and increase profit or productivity of thecompany. This company can manage diverse regulations in the various markets it opertae istbusiness and previous few years Germany have changed regulations regarding market entrywhich influence the business of the company.Economical-It include inflation & deflation rate, foreign exchange rate and others.Increasing liberalization of trade policy of Germany can help L’Oréal to invest further intoregions which are so off-limits to the firm (Amit and Zott, 2012). Economic crisis create bad1
impact on the busyness growth of the company, the world GDP is fall sharply from 2007 to 2009and this economic downturn will be a great challenge for the development of the organisation.Social-This factor include health & safety attitude, culture, demographics, traditions,tastes & preferences of the customers and others (Bharadwaj and et. al., 2013). With increasingliberalization the attitude towards health & safety are getting lax and L’Oréal needs to stay awayfrom these attitudes as the cost of failure is too high in Germany. Change in consumer tastes andpreferences also influence the business of the company.Technological-It include innovation, technology, supply chain disruption because oftechnology, innovation in customer services and others. L’Oréal can reduce its production byusing latest technology such as the organisation can use latest machinery and instruments thatproduce more products in less time this positively impacted the business growth of the firm. Byusing various promotional channels like social media and others it can provide information aboutits products to its consumers and increase the number of customers.Environmental- This factor include climate change, rules and legislations of environmentthat are developed by government, limiting carbon footprints, laws regulating pollution etc. InGermany, the Paris Climate Agreement has take original targets to adhere for the nationalgovernment of Germany. In the from of result, according to environmental standards it can be agreat scrutiny for L’Oréal in Germany. Extreme weather is also adding to the cost of operationsof the company as it has to invest in making supply chain more flexible.Legal-It include various laws and legislation such as discrimination law, data protectionlaw, systems of justice and others. The EU law affect L’Oréal and the company banned to use ofcertain kind of chemicals such as Phthalates or the firm is warned to produce that mind ofproducts which do not contain chemicals and any harmful substance. An advertising legislationis also impacting this company and the firm follow al the rules that are set by AdvertisingStandards Authority. The rules of this authority is that the advertisement which are shown by thecompany should not be mislead that over exaggerating the functions of a products.SWOT analysisThis analysis is used by organisations as a strategic planning tool & technique that is usedby organisations to find out strengths, weaknesses, opportunities and threats related to thebusiness competition and project planning (Blackburn, Hart and Wainwright, 2013)2
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